Oracle to Acquire Semiconductor, Software Companies

Oracle, a leading IT company, said that it would acquire chip developers in order to gain more intellectual property that powers computer chips. Acquisition of chip designers will allow Oracle to customize its microprocessors precisely in accordance with its own requirements and demands of its clients. In addition, the company will continue to take over software companies.

“You are going to see us buying chip companies. [We want to] own more of the intellectual property that underpins computer chips," said Larry Ellison, chief executive officer of Oracle at the OpenWorld 2010 event, reports Bloomberg news-agency.

Earlier this year Oracle finalized acquisition of Sun Microsystems, a company that designs its own microprocessors, servers and software. Given the nature of Oracle itself, it is highly likely that it would try to acquire semiconductor companies already involved in the development of enterprise hardware.

"Oracle may buy a semiconductor company with technology for servers. You’ve got to think it is focused on enterprise hardware, on the server. AMD jumps off the screen," said said Doug Freedman, an analyst at Gleacher & Co. Other potential targets, according to Freedman include IBM's chip division and Nvidia Corp.

Even though AMD, IBM's chip design unit and Nvidia look compelling from server and high-performance computing perspective, they are unlikely to fit Oracle. The lion's share of AMD's and Nvidia's revenue come from consumer hardware and Oracle is a company that will hardly jump onto those markets. Obviously, paying billions for AMD or Nvidia and then dropping their primary businesses does not seem to be a good idea. IBM is also an unlikely candidate since its chip design unit works on Power processors that directly compete against Sun's SPARC chips. A more natural fit for Oracle will be Fujitsu's chip division, which also develops SPARC microprocessors. Another logical target would be a designer of ARM-based products.

Oracle also plans to acquire more software designers focused on specific industries. By zeroing in on specific areas, the company aims to stand out from rivals such as SAP AG.